Summary
- Hermès saw a 9% sales increase in Q2, maintaining strong performance amidst the luxury slump by using price hikes to offset US tariff.
Luxury fashion label Hermès has reported that its Q2 earnings showed a 9% year-over-year increase in sales, continuing to demonstrate its strong performance amid the luxury sector's ongoing sales slump. The Birkin bag maker claims that its recent price increase strategy has been well-received by its customer base, enabling the company to pass on controversial US duties to its affluent clientele.
According to Business of Fashion, Q2 sales reached €3.9 billion ($4.50 billion USD), roughly aligned with analyst expectations for a 10 percent rise. The label shared its report just days after US President Donald Trump brokered a trade deal with the EU, reducing a proposed 30% tariff on European goods to 15%.
While other groups like Louis Vuitton parent LVMH and Gucci parent Kering are still experiencing the negative impact of dampened demand for luxury goods, Hermès has touted its strong performance in 2024. Following a report of lower Q1 2025 sales, Hermès announced plans to raise prices on all products sold in the United States to offset the losses imposed by new tariffs.
“We are going to fully offset the impact of these new duties by increasing our selling prices in the United States from May 1, across all our business lines,” said Finance Chief Eric du Halgouet to BoF in April.
The company implemented a global price increase of 7%, with an additional 5% increase in the United States, where luxury demand has remained more consistent than in other markets, including China. With some bags starting at $10,000, the increase is no minor fee to pay, yet, the brand's highly exclusive distribution strategy has kept its magnetism strong, representing the highest heights of European luxury.
Hermès also shared a plan to progressively strengthen its production capacities in April, entailing the opening of a Loupes factory next year, a Charleville-Mézières factory in 2027, and a Colombelles workshop for its Kelly and Constance bags in 2028. Customers can expect to see production increase as soon as this year as the label plans the opening of its Isle d’Espagnac factory in central France.
Hermès shares have increased by 2% since the start of the year, beating out rivals like Cartier-owner Richemont. The rapidly evolving landscape eventually led to Hermès replacing LVMH as the world’s most valuable luxury stock, reaching a market cap of $276.3 billion USD in April.
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